In China, the spread of the Delta Covid variant may reduce energy demand. The latest outbreak has spread to nearly half of China's 32 provinces in less than two weeks, prompting Beijing to cancel flights and shut down Nanjing.
China reported 62 confirmed Covid-19 cases on Wednesday, according to the National Health Commission, with the majority of infections occurring in the eastern province of Jiangsu. Beijing banned train passengers from 23 regions on Tuesday, and residents of 46 Chinese cities were advised not to travel unless absolutely necessary.
Fuel demand in India remains weak putting downward pressure on prices. Diesel sales in July were 5.449 MMT, down 11% from the same period last year before the pandemic began, according to data from India's three largest fuel retailers. Diesel sales account for 40% of all oil consumption in India.
Meanwhile, OPEC crude production increased by 420,000 barrels per day in July, reaching a 15-month high of 26.82 million barrels per day, putting downward pressure on oil prices.
Crude inventories increased by +3.63 million barrels per day, versus expectations of a -3.0 million barrels per day draw, according to the EIA. Distillate stockpiles unexpectedly rose by +832,000 bbl, against expectations of a -500,00 bbl draw.
However, EIA gasoline supplies fell to an 8-month low of -5.29 million barrels per day, against forecast of -1.5 million barrels per day. Furthermore, crude supplies at Cushing, the WTI futures delivery point, fell by 543,000 barrels per day to a one-and-a-half-year low.
According to the weekly EIA report released on Wednesday, US crude oil inventories were 5.8% below the seasonal 5-year average as of July 30, gasoline inventories were 3.5% below the 5-year average, and distillate inventories were 6.7% below the 5-year average.
US crude oil production was unchanged w/w at 11.2 million bpd in the week ended July 30, down 1.9 million bpd (-14.5 percent) from the record-high of 13.1 million bpd set in February 2020.
Baker Hughes reported on Friday that active US oil rigs fell by -2 rigs to 385 in the week ending July 30, down slightly from the previous week's 1-1/4-year high of 387 rigs. Active oil rigs in the United States have risen substantially from a 15-year low of 172 rigs last August, indicating increased crude oil output in the United States.
The net long position in crude oil futures increased by +1 024 contracts to 449 764 contracts for the week ending July 27, according to the CFTC Commitments of Traders report. Shorts gained +7 341 contracts, while speculative longs gained +8 365 contracts.
Crude oil prices are likely to trade lower while under below key resistance level of 50 days EMA of $70.59 while immediate support level could be seen around $67-$64.20